President Barack Obama announced a $75 billion plan to ease the epidemic of home foreclosures Wednesday. Here's what's in the plan for you:

QHow does the refinancing program work?

AStrapped borrowers who have existing conforming loans can apply for a refinance through their existing lender. If they meet the program requirements, including that they occupy the home and can document their income, their lender may be able to offer a lower-interest-rate loan backed by Fannie Mae and Freddie Mac.

QHow does that help people?

ACurrently, many borrowers whose homes have lost value because of the housing market collapse do not qualify to refinance into lower-rate mortgages because they do not have enough equity in their homes. Under this program, borrowers with conforming loans will be eligible to refinance through Fannie Mae and Freddie Mac even if they have little or no equity in their homes.

QIf they're making their payments on time, why do they need help?

AThe administration wants to bring stability to the housing market without rewarding people who made greedy or irresponsible financial choices. By refinancing people who are making payments on mortgages larger than their homes are now worth, the government will reward people who play by the rules and reduce the likelihood that creditworthy borrowers will "walk away" from underwater mortgages. The administration believes that will help put the brakes on the vicious cycle by which plummeting home prices lead to more foreclosures, which further reduce home values for everyone in a community.

QWhat about people with "jumbo" mortgages?

ASorry. The administration plan does nothing for people with mortgages larger than the conforming loan limits set by Fannie Mae and Freddie Mac. They note that "jumbo" loans account for 2 percent of mortgages issued nationwide.

QWhat about helping borrowers with problems on second mortgages?

ASorry again. Any modification or refinancing would apply only to the primary mortgage.

QHow does the loan modification program work?

AThis program is only for "at-risk" borrowers who are struggling with mortgage payments above 38 percent of their income. Under the program, if the lender agrees to lower the interest rate or reduce principal to bring the payment to 38 percent of the borrower's income, the government will pay half of the additional cost to the lender to reduce the payment to 31 percent of the borrower's income.

QWhen do the new programs take effect?

ADetails will be released March 4, but administration officials said the new programs are in effect immediately. Much of the plan does not require congressional approval.

mreynolds3@tribune.com